Question:* The statement displaying wages from a job is called a ______?
Answer: • W-2
Question:* Joe deposits $10,000 in a savings account. He is supposed to leave the money there for one year and will receive $11,000. He is forced to take the money out of the account early. The interest on the day of withdrawal was computed as $710. However, he was charged a penalty of $200 because of the early withdrawal and only received $10,510. Which of the following is true?
Answer: • He should report interest revenue of $710 and a deduction for adjusted gross income of $200.
Question:* Which expense can be deducted on real estate held as an investment, but not on real estate held as a primary residence?
Answer: • Depreciation
Question:* Which expenditure will you be able to use to reduce the amount that you reports as adjusted gross income (AGI)?
Answer: • Moving expenses if job related and over a specified distance
Question:* Depreciation for tax purposes is:
Answer: • accelerated
Question:* When contributing to an IRA, what is the maximum amount a person under the age of 50 can contribute per tax year, assuming the individual's income is $45,000?
Answer: • $5,000
Question:* Which of the following items is not deductible?
Answer: • bank account interest
Question:* Municipal bond interest is:
Answer: • tax-exempt
Question:* Contibutions to a traditional IRA are
Answer: • tax exempt up to $5,500
Question:* True or False: Alimony Received is taxable
Answer: • True
Question:* Deductible work-related educational expenses do NOT include:
Answer: • Amounts donated to charity.
Question:* Which schedule is used to report business income?
Answer: • Schedule C
Question:* In filing a partnership income tax return, what is the purpose of Schedule K?
Answer: • To indicate how specified revenues and expenses of the partnership are passed through to the various partners.
Question:* The following professionals can represent clients before any office of the IRS:
Answer: • Enrolled Agents, Attorneys, and Certified Public Accountants
Question:* If itemized deductions exceed the standard deduction
Answer: • the itemized deductions should be used
Question:* Which income is non-taxable income?
Answer: • Child Support
Question:* ______ may be deducted from Gross Income.
Answer: • Student Loan Interest
Question:* Which of the following is NOT a filing status?
Answer: • Divorced
Question:* Kathy is divorced and her unmarried 27-year old son lived with her all of 2011. She paid all the household expenses and provided over half of her son's support. What is Kathy's filing status ?
Answer: • Head of Household
Question:* IRS stands for
Answer: • internal revenue service
Question:* Should gambling winnings be reported on the tax return?
Answer: • Yes, gambling winnings are taxable income.
Question:* How much can you take as a real-estate loss on an individual return?
Answer: • The lessor of loss or $25,000 if AGI is less than $150,000 (assuming one files a joint return) unless one is a real-estate professional.
Question:* If you are married filing jointly for year 2011 and have itemized deduction of $10,000 would you claim itemized or standard deduction?
Answer: • Standard Deduction
Question:* Steve wants to claim his son as a dependent on his tax return. His son, Mark, is 21 years old and attends a community college full-time. Can Steve claim his son as a dependent? If so, until what age can Steve continue to claim his son?
Answer: • Yes. Steve can claim his son until Mark reaches 24 years old.
Question:* Which of the following items cannot be itemized?
Answer: • homeowner's insurance
Question:* The amount of Social Security income that is taxable is dependent on how much other taxable income you have.
Answer: • True
Question:* Non-cash charitable contributions over $___ require additional details:
Answer: • 500
Question:* Lloyd is a CPA who prepares tax returns. Eddie, an Enrolled Agent, also prepares taxes. If both men submit form 2848 (Power of Attorney) for their clients, and indicate they can receive their client's refund check, who is authorized to cash or endorse the check?
Answer: • Neither. No tax preparer is allowed to cash or endorse refund checks for their clients, regardless of having a power of attorney for the client.
Question:* Capital Gains are reported under which Schedule
Answer: • Schedule D
Question:* Home Office Deduction on Schedule C is allowed:
Answer: • When there is income prior to the deduction.
Question:* Which of of the following is allowable itemized deduction?
Answer: • Medical Expense
Question:* Which of the following conditions does NOT prevent you from receiving earned income credit?
Answer: • Not having a qualifying child as a dependent
Question:* Gain on a 1031 exchange is recognized to the extent of boot.
Answer: • True
Question:* Which form is a home office reported on?
Answer: • Form 8829
Question:* For start-up expenses incurred, taxpayers are allowed to deduct up to what dollar amount for expenditures in the taxable year in which the business begins?
Answer: • $5,000
Question:* Which of the following statements is NOT true regarding tax benefits for education?
Answer: • Room and board expenses are eligible for both the Hope and Lifetime Learning credit.
Question:* The normal distribution code for IRA or pension income is:
Answer: • 7
Question:* Which of the following statements are false?
Answer: • Mortgage Insurance Premiums paid in the current year is a investment expense and subject to a 2% phaseout.
Question:* Which of the following would be deducted by an individual taxpayer directly on Schedule A of the Form 1040 as an itemized deduction?
Answer: • Investment expenses
Question:* Which qualifies as a 1031 exchange?
Answer: • Barn in Kentucky for Skyscraper in New Yotk
Question:* Which of the following is NOT deductible for moving expenses?
Answer: • House-hunting trip(s) and temporary living expenses
Question:* The documentation provided for real estate sales is referred to as a:
Answer: • 1099-S
Question:* Which of the following tests is NOT to claim a dependency exemption for your child:
Answer: • Age test
Question:* An S corporation is generally required to use the accrual method of accounting.
Answer: • False
Question:* The form showing income from gambling winnings is referred to as a:
Answer: • W2G
Question:* Which of the following related parties can recognize a loss on the sale or exchange of an asset between themselves for tax purposes?
Answer: • Daughter-in-law and Mother-in-law
Question:* Section 179 Depreciation cannot be deducted in the current year when:
Answer: • Only real property is purchased in current tax year.
Question:* What is the penalty for excess contributions made to an IRA account in a single tax year?
Answer: • 6%
Question:* Gain on a 1031 exchange is recognized.
Answer: • False
Question:* Which of the following is a tax deductible contribution by the donor? Assume all recipients are qualified charities.
Answer: • Zachary made a large donation to a nearby university. In exchange he receives the right to purchase football tickets for the upcoming season.
Question:* If a disability pension is reported on a 1099-R and the recipient is under the organization's minimum retirement age, which line of Form 1040 should it appear on?
Answer: • Report as Wages on line 7
Question:* The accounting system used for tax purposes has a:
Answer: • modified-cash basis
Question:* How long after the close of a tax period must a business file its tax return, if it does not file an extension form?
Answer: • Two and a Half months
Question:* Using tax information from prior years is referred to as a:
Answer: • rollover
Question:* Which of the following statements with respect to an S corporation is false?
Answer: • Tax-exempt income earned by an S corporation is taxable at the shareholder level.
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